Corporate Profits Rebound

Corporate profits looked good in the fourth quarter, partially because of the comparison to third quarter, which was weakened by hurricane Katrina.  Still, it’s a good number, and on trend.

However, look for less growth in 2006.   GDP growth will be a hair lower and labor costs are rising, leading to a profit squeeze.

Business implication:  Profits won’t be easy to grow in 2006.  That will require good strategy and execution, because the economy isn’t going to do it for you.